TMI Tax Updates - e-Newsletter
March 24, 2017
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
TMI SMS
Highlights / Catch Notes
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Income Tax:
Addition on account on account of interest subsidy and excise refund - incentives to new industrial units and substantial expansion of the existing units - J & K - incentives received by way of excise duty refund and interest subsidy are capital receipts in the hands of the assessee and therefore not chargeable to tax. - AT
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Income Tax:
Allowing set off of long-term capital loss on sale of preference shares against the long term capital gain earned on sale of apartment - The assessee can plan to reduce its tax liability through legitimate means - AT
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Income Tax:
Addition u/s 68 - When the depositors are regular tax payers and the advances made by such depositors as also share application monies paid by such shareholders are duly accepted in their personal assessments, there cannot be any occasion to hold that these amounts are unexplained in the hands of the company. - AT
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Income Tax:
Explanation 5A to section 271(1)(c) is now very clear, that if there is a difference in the original return filed under section 139 (1) of the Act and the return filed in response to section 153A of the Act, the assessee is deemed to have concealed the income - Levy of penalty confirmed - AT
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Income Tax:
Estimation of profit - purchase from hawala operators - bogus purchases - CIT(A) estimated GP @ 17.5% on alleged bogus purchases as against 7.11% declared by the assessee - if GP is estimated to tune of 12.5% of the purchases from these alleged hawala operators which will cover any leakage of Revenue by way of VAT, commission etc. - AT
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Income Tax:
Interest u/s 234B and 234C - additional income was surrendered during survey to buy peace and avoid further adverse consequences - since the assessee was not liable to pay advance tax u/s 208 or 210, no interest liability - AT
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Customs:
Entitlement of interest of amount deposited during investigation - the officers of DRI had clearly no jurisdiction to demand and collect any amounts from the assessee, in view of the fact that they are not vested with powers of an Assessing Officer - claim of interest allowed - HC
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Customs:
Finalization of provisional assessments of ex-bond Bills of Entry filed - Import of crude palm oil - Timing of measurement of quantity - since the goods had already been cleared after import, it was not practically possible to take fresh dip measurement of the same stock of liquid in the same tank - AT
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Service Tax:
Validity of show cause notice - extended period of limitation - Whether the ingredients for resort to proviso to section 73(1) of FA, 1994 are present to obviate the contention that section 73(3) of FA, 1994 should have been resorted to for closing the matter? - This is a fit case of closure of the proceedings u/s 73(3) of FA, 1994, without any of the penalties - AT
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Service Tax:
Refund - unjust enrichment - The mere fact that the service tax amount have not been in the clients ledger account, and that the service tax amount paid has been accounted as an expenses in profit and loss account cannot override the factual position that whatever billing has been made is inclusive of service tax which is not shown separately - refund allowed - AT
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Central Excise:
Provisional assessment - whether adjustment of excess paid duty against short paid duty is permitted? - adjustment of excess paid duty against short paid duty is permissible for the entire year i.e. 2003-04 at the time of finalization of the assessment - AT
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Central Excise:
Cement cleared for export to Nepal - there is no statutory requirement to declare sale price (RSP/MRP) on the cement bags meant for export to Nepal - the benefit of the N/N. 4/2006-CE is not available to the subject goods - AT
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Central Excise:
Refund claim - unjust enrichment - where the appellant have written off the excess duty paid to the profits in the relevant accounting year, that does not amount to passing of duty to a third party. The presumption drawn by the Revenue has got no legs to stand - refund allowed - AT
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Central Excise:
SSI exemption - use of Brand name which was assigned vide oral contract - even in the absence of written agreement the submission of the owner of the brand name is acceptable as there is no need for written agreement in all cases - AT
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Central Excise:
CENVAT credit - input services - works contract service, GTA, telephone, security service, consulting engineering service, rent a cab operator service etc. - The said activity is covered by the definition of input service during the relevant time - credit allowed - AT
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Central Excise:
Warehouse - whether the appellants licensed Warehouse (Customs Bonded Warehouse) located within the appellant's factory would be considered as part of factory as defined under Section 2 (e) of Central Excise Act? - Held Yes - AT
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Central Excise:
CENVAT credit - capital goods - disallowance of Cenvat credit being 50% of the eligible credit, which was required to be taken in the subsequent year, but was taken in the 1st year itself - only the liability for interest survives, no penalty is excisable - AT
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Central Excise:
Valuation - manufacture of computers - whether the 'Technical Service Charges' recovered vide separate invoice are includible in the assessable value or not? - Held No - AT
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Central Excise:
Claim of refund after reduction in MRP post clearance - Valuation - Footwear - Depot as place of removal - MRP based valuation - Section 4A of Central Excise Act, 1944 - claim of refund allowed - AT
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VAT:
Re-opening of assessment - - sales tax / vat - escaped assessment - whether an ‘audit objection’ can be construed as ‘information’ within the meaning of Section 19 of the State Act - Held no - reopening of assessment not permissible. - SC
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VAT:
Liability of tax - transfer of stock was not backed by any Form-F - Once a statutory presumption is drawn regarding sale in the absence of Form-F, and the assessee has not been able to put forth any material, which may have been responsible for non-submission of Form-F, demand of tax is to be confirmed - HC
Articles
Notifications
News
Case Laws:
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Income Tax
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2017 (3) TMI 1058
Sale proceeds of shares of Karuna Cables - income from other sources OR STCG shown by the assessee - ITAT deleted addition - Held that:- Tribunal after recording the facts particularly the remand report of the Assessing Officer accepting the claim of the respondent-assesesee found no reason to upset the order passed by the CIT(A). Thus the impugned order of the Tribunal has also on facts found that the sale proceeds received on sale of KCL shares to be genuine.
In view of the concurrent finding of facts by the CIT(A) and the Tribunal, the question of law as proposed does not give rise to any substantial question of law
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2017 (3) TMI 1057
Review petition - notional tax effect - Held that:- We are inclined to dispose of the present review petition, basically in view of the order passed in Commissioner of Income Tax, G vs. Meghalaya Steels Ltd. [2015 (8) TMI 525 - SUPREME COURT] and the subsequent circular which was admittedly issued on 10th December, 2015, prior to the date of order passed by the Supreme Court 12/August/2016. There is no issue now that review is available under the Act.
Admittedly, the review is maintainable and no further discussion is required on the maintainability of the review. However, the effect of Circular No.21/2015 just cannot be overlooked at the time of hearing of the review and even the appeal. The Circulars and the position of law on the date of hearing of this review petition and/or even otherwise, as clear and we are inclined to dispose of the present review petition, solely on the ground and the reasons so provided in Commissioner of Income Tax vs. Sunny Sounds P. Ltd. (2016 (5) TMI 112 - BOMBAY HIGH COURT ) which is based upon Circular No. 21/2015. Based on the law and the facts so referred above, we have no option, but to dispose of this review application, solely on the foundation of the above circular as even the “notional tax” effect is not more than ₹ 20.00 lakhs.
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2017 (3) TMI 1056
Reopening of assessment - as per appellants notices were not served within time either on the Assessee or on his authorized representative - Held that:- Having regard to the facts of present case, as assessment order has already been passed on the basis of impugned notices, we should dispose of the appeal by leaving it open to the appellants to pursue remedy under the Act where all the contentions can be raised including the contention that there was no valid notice served within the time on the assessee or his authorized representative, as contemplated under law. With regard to absence of separate query with regard to AOP, we are not clearly able to cull out whether any separate query / notice was sent to the appellant in Special Appeal No. 30 of 2016. In this regard, we may notice that from the reasons supplied, which we have extracted, wherein ₹ 1,99,31,392/- was noted as escaped assessment, there is reference to the query dated 20.10.2015 and the reminder dated 16.02.2016. We find that in neither writ petition, this query letter dated 20.10.2015 is seen produced. No doubt, learned counsel for the appellant would submit that even reasons supplied would show the query letter was addressed to Sri Maruti Nandan Sah and not to AOP but we would think prima facie that Sri Maruti Nandan Sah is also admittedly the principal member of AOP. We cannot, on the material available, find conclusively - whether it is issued to Sri Maruti Nandan in his individual capacity or as member of the AOP. We would still leave it open to the appellants to raise contentions before statutory authority.
We, therefore, cannot proceed on the basis that there is no query letter issued but even then, we leave it open to the appellants to pursue the said contention also that there is no query letter issued with regard to the AOP.
Therefore, we think that we should not interfere under Article 226 in the facts of these cases. Instead, we leave it open to the appellants to raise all contentions available to them under the law before the statutory authority.
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2017 (3) TMI 1055
Reopening of assessment - applicability of provisions of Section 50C - Held that:- We note that the very issue with regard to transfer having taken place in the Assessment Year 2008-09 by way of part performance as contended by the petitioner is a matter of dispute. This would require investigation by the Assessing Officer and could be appropriately done only during the Assessment proceedings.
So far as the submission on behalf of the petitioner that the Assessing Officer could not have any reason to believe that income chargeable to tax has escaped assessment in view of the decision of this Court in Greenfield Hotels & Estates (P) Ltd. (2016 (12) TMI 353 - BOMBAY HIGH COURT ) is concerned, it is observed that the aforesaid decision of this Court did not independently rule appropriate interpretation of Section 50C of the Act. The Court refused to entertain the Revenue's appeal for the reason that the impugned Order of the Tribunal had followed its earlier decision in case of Atul G Puranik vs ITO [2011 (5) TMI 576 - ITAT, Mumbai]. The Revenue had accepted the same and in appeal from the Order of the Tribunal in Atul G. Purnaik (supra) was preferred. In the aforesaid background the Court refused to interfere with the Order of the Tribunal as there were no distinguishing features either on facts or in law as reiterated in GreenField Hotels & Estates (P) Ltd. (supra) from that existing in Atul G. Puranik (supra).
In the present facts, the petitioner had not brought any decision of the Tribunal on the issue of law while filing its objections which the Assessing Officer could have dealt with bearing in mind facts involved. - Decided against assessee
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2017 (3) TMI 1042
Disallowance of expenditure incurred towards the cess on green leaf from composite income - Held that:- Hon'ble Calcutta High Court in the case of CIT vs A.F.T. Industries Ltd reported in (2004 (7) TMI 81 - CALCUTTA High Court) wherein it was held that the same was to be fully allowed from the composite income. The issue decided by the order of the Hon'ble Calcutta High Court in the case of AFT Industries Ltd (supra) have been approved by the Hon'ble Apex Court in the case of M/s Apeejay Tea Co Ltd COMMISSIONER OF INCOME TAX Versus M/s APEEJAY TEA CO. LTD [2015 (8) TMI 1260 - SUPREME COURT] - Decided in favour of the assessee
Addition u/s 14A - Held that:- No satisfaction as required under the provisions of section 14A of the Act for making the disallowance was recorded. Thus the additions made by the AO under the provisions of section 14A of the Act read with rule 8D of income tax rules are not sustainable. As such we find no infirmity in the order of ld CIT(A). Hence this ground of Revenue’s appeal is dismissed.
Disallowances made u/s 14A while computing the book profit u/s 115JB - Held that:- The additions made by the AO under rule 8D read with section 14A of the Act has been deleted by our order vide Para-11 to 11.2 of this order. Therefore, the instant issue does not require any adjudication. Hence, the ground raised by Revenue is not maintainable and hence dismissed.
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2017 (3) TMI 1038
Interest income from securities - amount deposited with Paschim Gujarat Vij Co.Ltd for availing electricity for the purposes of construction of power plant - whether treated as revenue in nature chargeable to tax under the head income from other sources? - Held that:- The assessee is engaged in the business of special purpose vehicle and during the assessee was engaged in the construction of electricity plant at Mundra, Gujarat and he security deposit was given purely to avail the electricity for the purpose of construction of plant which by no stretch of imagination would be treated as revenue in nature as the sole purpose behind the advancing security was to avail electricity for the construction purpose and therefore inextricably linked with the construction of the plant. We also find that the similar issue arose in the assessment year 2009-10 and the FAA decided the issue in favour of the assessee and the appeal filed by the revenue before the ITAT was also dismissed by the Tribunal.
In the case of Bokaro Steel Ltd (1998 (12) TMI 4 - SUPREME Court) held that the interest from advances paid to contractor by the assessee for the purpose of facilitating the work of construction is incidental to the work of construction of plant undertaken by the assessee and receipt accruing from the said advances was held to be capital receipt and not income of the assessee from other independent sources.
The deposit has been given by the assessee in order to avail electricity so that the construction of the project is facilitated. In our opinion, the assessee has advanced money which is connected to construction of plant and therefore, we are not in agreement with the conclusion drawn by the ld.CIT(A). Therefore, respectfully following the ratio laid down above we set aside the order of the ld. CIT(A) and direct the AO to treat the interest as capital receipt by deleting the disallowance. - Decided in favour of assessee.
Disallowance of interest expenditure on the borrowings claimed as deduction against the interest income from the fixed deposits - Held that:- As decided in assessee's own case for AY:2009-2010 we find that there is a direct nexus of funds of the borrowed capital with the Fixed Deposits in question partly. The interest paid on a loan taken to avoid premature encashment of the Fixed Deposit is deductible against the interest earned on the Fixed Deposit as held in the case of Raj Kumari Agarwal vs. DCIT [2014 (7) TMI 867 - ITAT AGRA]. Having decided on the issue of nexus of funds and the allowability of the interest expenses against the interest income, the remaining issue is about the interest rate of 7.81% applied by the AO in determining the interest expenses. In our opinion, this requires revisit of the issue to the file of the AO. Assessee must demonstrate before the AO the exact account of interest expenses relatable to the interest income in question. If necessary, AO shall admit the letters from the bank, if any, in the interest of justice.
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2017 (3) TMI 1037
Clam of deduction u/s 80P - Held that:- CIT(A) is justified in directing the AO to allow the deduction claimed by the assessee u/s 80P on the reason that the assessee, a cooperative credit society is not a bank for the purposes of section 80P(4) of the Act. Thus the orders of the Ld.CIT(A) dated 11.02.2011 and 29.11.2011 for the Assessment Years 2007-08 and 2008- 09 respectively are upheld. - Decided in favour of assessee
Denial of deduction u/s.80P(2)(a)(i) - interest income arising on fixed deposit - Held that:- In the instant case there is no dispute to the fact that the society is a credit cooperative society authorised by the registrar of cooperative societies for accepting deposits and lending money to its members as per license granted by the registrar of cooperative societies and the main object of the society is to provide credit facility to members who can be any person of the society. We find in the case of Mahavir Nagari Sahakari Pat Sanstha Ltd.(2000 (2) TMI 234 - ITAT PUNE ) has held that the credit society which is carrying on the business of banking activity and providing credit facility to its members is eligible for deduction u/s.80P(2)(a)(i). In view of the above discussion CIT-A justified in holding that the assessee is entitled to deduction u/s.80P(2)(a)(i) when the income of the society on account of interest from banks other than Co-op. Banks, interest on Mutual Funds, long term capital gain on mutual funds and short term capital gain on Mutual Fund - Decided in favour of assessee
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2017 (3) TMI 1032
TPA - selection of comparables - Held that:- Lower authorities have erred in excluding assessee’s two comparables namely M/s. IAI Industries and Victor Gaskets. As from the case file that the assessee as well as the above two entities do have the same NIC codes of 30913 indicating to be having broader comparability in automotive ancillary segment. These two entities profiles reveal them to be engaged in manufacturing activity of auto ancillary parts not disputed by the lower authorities. We accordingly quote assessee’s TNMM method having hallmark of broader product similarity. This transfer pricing issue is accordingly remitted back to the file of Transfer Pricing Officer to pass afresh order as per law after including these two entities
Correctness of Section 43B disallowance of Sales Tax payment - Held that:- The assessee has sufficiently made its case to have paid in advance the sales tax sum in question in said earlier assessment years without claiming any deduction. It pleaded before the Assessing Officer that the Commissioner (appeals) concerned had declined its challenge to the impugned sales tax liability thereby crystallizing the same in the impugned assessment year making it to record necessary entry in P&L account. Learned Departmental Representative fails to dispute this factual position. We accordingly direct the Assessing Officer to delete the impugned disallowance. This ground is accepted.
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2017 (3) TMI 1036
G.P. addition - purchase from hawala operators - bogus purchases - Held that:- The purchases are made by the assessee and amounts are standing in the books of the assessee and onus is on the assessee to prove the genuineness of the purchase transaction. We have observed that the assessee could not produce these three parties except Bharat Forge despite being called by the AO . The notices issued u/s 133(6) of 1961 had returned un-served as these parties do not exist on the addresses given by them. The assessee could not produce stock register and also could not prove actual delivery of material being purchased from these hawala dealers as octroi receipts, goods receipt note, lorry receipts, purchase orders could not be produced nor invoices had any details of movement of goods to assessee from the alleged hawala dealers,, however, the assessee did produced the sample copies of purchase invoices and also submitted that payments were made by account payee cheque. Under the factual matrix of the case , we have observed that the learned CIT(A) rightly held that profit embedded in these purchases are to be estimated wherein the learned CIT(A) estimated GP @ 17.5% on alleged bogus purchases as against 7.11% declared by the assessee.
End of justice will be met in the instant case if GP is estimated to tune of 12.5% of the purchases from these alleged hawala operators which will cover any leakage of Revenue by way of VAT, commission etc. . Thus, as compared to the GP ratio at 7.11% declared by the assessee, we are estimating GP ratio at the rate of 12.5% on the said bogus purchases wherein the assessee will be allowed credit of declared GP ratio of 7.11% and net addition to GP ratio shall be to the tune of 5.39% on bogus purchases, hence , we allow partial relief to the assessee.We order accordingly.
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2017 (3) TMI 1033
Income from share transaction - business income or capital income - Held that:- As
observed that the assessee has undertaken transactions in purchase and sale of shares. The assessee is consistently dealing in shares till assessment year 2001-02 as trader and joined employment with Indusind Bank on 30-05-2010. The assessee has declared itself as investor since 30-05-2010, which stand of the assessee being investor in shares was finally accepted by Revenue either by the AO or by learned CIT(A) while adjudicating first appeal for all these years , except for the impugned assessment year wherein AO and learned CIT(A) have held assessee to be a trader in shares and income was brought to tax as income from ‘Profit and Gains of Business or Profession’. The assessee has not borrowed any funds for making investments in shares which were invested out of own funds. The assessee has also reflected investment in shares as ‘Stock’ in the Balance Sheet filed by the assessee with Revenue and the same is not reflected as opening or closing stock in Profit and loss account as the same was not routed through Profit and Loss Account.
The assessee has valued investments in shares in Balance Sheet at ‘Cost’ consistently. Assessee was finally treated as an investor since assessment year 2001-02 onwards ( for post 30-5-2010 transactions) except for impugned assessment year. Nothing contrary is brought on record by learned DR to disprove this contentions of the assessee. We have also carefully gone through number of transactions, volumes, frequency etc. of investment in shares. Also observed that assessee has contended that for the transactions squared within 30 days of acquisitions , the same be treated as business income and for transactions for sale of shares which were sold beyond 30 days of purchase of and not more than twelve months , the resultant gains from the sale of shares be classified and brought to tax under the head ‘Income from Capital Gains’ for the shares dealt which are listed securities as per mandate of Section 2(42A) of 1961 Act. We do not find any merit in the contentions of the Revenue of treating assessee as a trader in shares for impugned assessment years. Principles of res-judicata no doubt are not applicable to the income-tax proceedings but principles of consistency are to be applied (Ref: Radhasoami Satsang v. CIT (1991 (11) TMI 2 - SUPREME Court).
Thus we hold that the assessee is an investor in shares and gains arising from sale of shares for the period of holding from 30 days to not more than twelve months be treated as short term capital gains in case of listed securities as are provided as per mandate of Section 2(42A) of 1961 Act, and where period of holding prior to sale of share is up-to 30 days, the same is to be treated as income from ‘Profit and Gains of Business or Profession’ as it has an indica of trade and shall be brought to tax accordingly. We further hold that opening and closing stock of shares held as investments are to be valued at cost as is valued by the assessee and not at cost or market value whichever is lower as is directed by learned CIT(A), as the shares were held as investments and not as stock-in-trade. - Decided partly in favour of assessee
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2017 (3) TMI 1039
Benefit of deduction u/s 80P(2) - Held that:- In the instant case, the assessee is a primary agricultural credit society registered under the Kerala Cooperative Societies Act, 1969. The certificate has been issued by the Registrar of Cooperative Societies to the above said effect and the same is on record. The Hon’ble High Court, in assessee’s own case and other batch of cases, had held that primary agricultural credit society, registered under the Kerala Cooperative Societies Act, 1969, is entitled to the benefit of deduction u/s 80P(2). Since there is a certificate issued by the Registrar of Cooperative Societies, stating that the assessee is a primary agricultural credit society, we hold that the assessee is entitled to the benefit of deduction u/s 80P(2) of the Act.
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2017 (3) TMI 1050
Eligibility to deduction claimed u/s 80IA(4) - Held that:- The assessee was not a works contractor simplicitor and was a developer and hence Explanation to section 80- IA(13) does not apply to the assessee. Further, in addition to developing the infrastructure facility, the assessee was even operating and maintaining the same. Thus, clearly the assessee is eligible for deduction u/s 80-IA.
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2017 (3) TMI 1051
Addition on account on account of interest subsidy and excise refund - treated as capital receipt - Held that:- As decided in Shree Balaji Alloys Vs. Commissioner of Income Tax [2011 (1) TMI 394 - Jammu and Kashmir High Court] held that a close reading of the Office Memorandum and the amendments introduced thereto with para 3 of Central Excise Notification Nos. 56 and 57, dt. 11th Nov., 2002, makes it amply clear that the generation of employment so contemplated was not casual or temporary but of permanent nature and the paramount consideration of the Central Government in providing the incentives to new industrial units and substantial expansion of the existing units was generation of employment through acceleration of industrial development in public interest. Such incentives, designed to achieve a public purpose, cannot be construed as production or operational incentives for the benefit of assessees alone. It was further held that making of additional provision in the scheme that the incentives would be available to the eligible industrial units from the date of commencement of commercial production and that these are not to be allowed for creation of new assets cannot be viewed in isolation to treat the incentives as production incentives. Such provisions are intended to ensure that the incentives are made available only to the bona fide industrial units so that the larger public interest of eradicating unemployment is achieved. The Court finally concluded that the incentives received by way of excise duty refund and interest subsidy are capital receipts in the hands of the assessee and therefore not chargeable to tax.
The ratio laid down in the aforesaid decision is squarely applicable to the very same subsidy received under the very same scheme of State of Jammu & Kashmir by the Assessee in the present case. We therefore find no grounds to interfere with the conclusions of the CIT(A). The grievance of the revenue in ground No.2 regarding the revised return of income is not valid and has rightly held by the CIT(A) the said revised return of income was valid u/s.139(5) of the Act and was acted upon by the AO. - Decided in favour of assessee
Excluding the subsidies in question from computation of book profit u/s 115JB - Held that:- The admitted factual and legal position in the present case is that subsidies in question is not in the nature of income. Therefore they cannot be regarded as income even for the purpose of book profits u/s.115JB of the Act though credited in the profit and loss account and have to be excluded for arriving at the book profits u/s.115JB of the Act. We hold accordingly and confirm the order of the CIT(A) in this regard. In light of the aforesaid discussion, we are of the view that the subsidies in question should be excluded for the purpose of determination of book profits u/s.115JB of the Act. We hold accordingly and allow Gr.raised by the Assessee.
Deduction under section 80IB - amount of Lab Subsidy credited to the Profit & Loss Account - Held that:- As can be seen from the grounds of appeal of the Assessee, the only grievance projected by the Assessee is that there should not be double exclusion of the sum of ₹ 1,50,036/- as the Assessee while computing eligible deduction u/s.80IB of the Act has already reduced this sum. We are of the view that it would be just and appropriate to direct the AO to consider the claim of the Assessee in this regard and if the contention of the Assessee is found correct, the AO shall give the required relief.
Addition made u/s 14A - Held that:- Hon’ble ITAT Kolkata in the case of REI Agro Ltd. Vs. DCIT (2013 (9) TMI 156 - ITAT KOLKATA) has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(ii) & (iii) of the Rules. In the light of the admitted factual position that the assessee had earned dividend income of only ₹ 8,440/- during the previous year, we are of the view that there can be no disallowance u/s 14A of the Act of any sum beyond ₹ 8,440/-. Accordingly the addition made u/s 14A of the Act is directed to be restricted to the extent of dividend income of ₹ 8,440/-.
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2017 (3) TMI 1034
Claim of depreciation - Held that:- Depreciation is a general principle represents the diminution in the value of a capital asset, when apply to the purpose. Thus, the term depreciation is to be understood in commercial sense then it can be said that it is a normal wear and tear, which required to be replaced at a point of time in future - See CIT vs Anand Theaters (2000 (5) TMI 4 - SUPREME Court )
When two views are possible, which favour the assessee, has to be followed, further favours the case of the assessee. Further, it is not the case of the Department that the machinery was never put to use by the assessee for its manufacturing activity as it is an admitted position in earlier year, the claimed depreciation was allowed to the assessee. During the relevant period, due to lull in the business, the manufacturing activity was not carried out. It is not the case that the manufacturing activity was permanently stopped rather due to temporary lull in the business, in a hope of improvement in the market condition, the machinery was kept ready for use. Since, the depreciation is statutory allowance and the manufacturing activity was temporarily stopped, therefore, it has to be allowed. Thus, this ground of the assessee is allowed.
Ad-hoc addition to the gross profit and further making enhancement in the gross profit percentage to 1.89% by rejecting the books of account of the assessee - Held that:- We find that the assessee duly produced the party-wise details of purchase and sales with the help of register maintained for this purpose and also confirmation from the concerned parties. Ld. Assessing Officer issued notices u/s 133(6) of the Act to all the creditors to which all the parties attended/submitted their replies as is evident from para 5.3 of the impugned order. As is evident from the assessment order itself (para-7) that certain discrepancies were noticed in the audit report, meaning thereby, the audit report was duly filed by the assessee. In the assessment order itself (para-7-II), there is a mention that during assessment proceedings itself, the assessee filed audit report on 13/10/2009. It means the audit report was filed by the assessee, which was ignored by the ld. Assessing Officer. It is also noted that for Assessment Year 2009-10, the same GP was accepted by the Department, while framing the assessment u/s 143(3) of the Act, therefore, there is no reasons to increase the same by 1.89% of the turnover. Therefore, the ld. Assessing Officer is directed to delete the ad-hoc enhancement to the tune of 1.89% and accept the gross profit accepted for Assessment Year 2009-10 as there is no reason to increase the gross profit, without bringing contrary facts on record, thus, this ground of the assessee is allowed and disposed off in terms indicated hereinabove.
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2017 (3) TMI 1053
Addition on notional basis on account of interest accrued - capital contribution made by the assessee in the partnership firms namely Kamanwala Lakshachandi Todays Developers (KLTD) and Kamanwala Lakshachandi Todays Construction (KLTC) - assessee has offered the same to tax in assessment years 2012-13 & 2013-14 - Held that:- It is a case of double assessment of same income. Such a situation is highly unjustified and not permitted under the provisions of income tax law. Therefore, keeping in view alternative prayer of the assessee, we direct that interest income offered in the subsequent years should be excluded from total income to remove the double addition. The AO is directed to pass requisite rectification order in Assessment Years 2012-13 & 2013-14 so as to give effect to our order. The assessee is also directed to furnish requisite details and documentary evidences to the AO to show that same interest income has already been offered in A.Y. 2012-13 and 2013-14. Thus, these grounds may be treated as allowed in accordance with the aforesaid directions. Under these circumstances, we do not find it necessary to adjudicate the other issues raised by the assessee with regard to these grounds.
Disallowance on account of Sundry Debtors written off by the assessee during the year - Held that:- CIT(A) has passed nonspeaking order without giving proper reasoning. We find it appropriate to send this issue back to the file of the AO. The assessee shall submit on record requisite details and evidences to justify its claim. The assessee is required to show that the impugned amount has already been included in its income in earlier years so as to claim the benefit of paid debts u/s 36(1)(vii). The AO shall decide this issue again after considering all the facts and circumstances, as may be brought on record by the assessee. The assessee is also permitted to make any alternative claim as may be permitted under the law.
Disallowance of TDS written off during the year - Held that:- Disallowance has been confirmed by the lower authorities without examining facts and figures. It was shown that these amounts were recoverable from the parties on account of TDS deposited by the assessee on behalf of these parties, but the payment in full was inadvertently made to these parties. However extra amounts paid could not be recovered from the said parties. Under these circumstances, these unrecovered amounts are of nature of loss incurred during the normal course of business. Complete details were shown to us by Ld. Counsel in this regard. Nothing wrong has been pointed out by the Ld. DR in this regard. Under these circumstances, we find that disallowance made by the AO was not justified under the law.
Disallowance on account of rent paid u/s 40(A)(2)(b) - Held that:- Assessee has been able to discharge its onus as was envisaged under the law, whereas the AO had wrongfully invoked provisions of section 40A(2)(b) and also erred in disallowing the expenditure in full. Thus, since disallowance made by the AO is contrary to law and facts, same is therefore deleted.
Disallowance on account of write off of the investment made in Joint Venture - Held that:- Evidences brought before us have not been properly examined by the lower authorities. The evidences do indicate that the debt had become but in absence of their examination in the light of facts of this case, no proper conclusion can be drawn by this stage. Further, requisite facts regarding subsequent recovery and its inclusion in the income of subsequent years have also not been properly brought on the records and anlysed by the lower authorities. Under these circumstances, in the interest of justice, we find it appropriate to send this issue back to the file of the AO.
Disallowance of long term capital loss arising from sale of shares - Held that:- It is true that since loss has been claimed by the assessee, therefore, primary onus lies upon the shoulders of the assessee to justify the same. But, it is equally true that no claim should be disallowed on the basis of mere surmises and conjecturers. It appears that in this case also both the parties lacked in their duties in terms of discharging respective onus lied upon them under the law. Therefore, we find it appropriate to send this issue back to the file of the AO. The assessee shall bring on record all the primary evidences to justify and substantiate the said claim.
Addition u/s 14A - Held that:- It is admitted case that no exempt income has been earned during the year, therefore, Ld. CIT(A) correctly deleted the disallowance made by the AO
For A.Y. 2012-13 disallowance sustained by the Ld. CIT(A) u/s 14A is hereby confirmed. It is noted that exempt income has been earned by the assessee during the year under consideration. Nothing has been brought before us that why disallowance of 0.5% of average value of investments as envisaged under rule 8D(2)(iii) should not be made in the given facts of this case. Further, nothing incorrect has been pointed out in the order passed by Ld. CIT(A) while confirming the disallowance.
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2017 (3) TMI 1047
Addition u/s 68 - share application money and unsecured loan received from directors as unexplained - Held that:- When the depositors are regular tax payers and the advances made by such depositors as also share application monies paid by such shareholders are duly accepted in their personal assessments, there cannot be any occasion to hold that these amounts are unexplained in the hands of the company. The credit worthiness or identity cannot be an issue in such a situation. The fact that there are doubts about sources of these monies in the hands of the depositor or shareholder cannot be an issue either. In any event, when credit worthiness is accepted for a part of the amount, as the CIT(A) rightly holds, credit worthiness cannot be declined for another part of the same amount- and that too without any cogent material at all. In the case of a director, the identity also stands accepted anyway. In the light of these discussions, as also bearing in mind entirety of the case, approve the well reasoned conclusions arrived at by the learned CIT(A) and decline to interfere in the matter.
Additions made on account of disallowance of employees’ contribution to PF and ESI under section 36(1)(va) - CIT-A deleting the additions -Held that:- When it was pointed out to the learned DR that the CIT(A) has given a categorical finding that the amounts well within the grace period, and there is nothing to controvert the same, learned DR did not say anything beyond placing reliance on the order of the Assessing Officer. We, therefore, see no reasons to disturb the conclusions arrived at by the CIT(A) and to interfere in the matter.
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2017 (3) TMI 1046
Disallowance of interest - Held that:- Advances were made for the purpose of import of rough diamonds, and simply because imports could not be effected the nature of advances would not change, has remained uncontroverted by the revenue. In any case, as held by Hon'ble Supreme Court in the case of S.A. Builders (2006 (12) TMI 82 - SUPREME COURT) the expression 'commercial expediency' is of wide import and even advances for the purpose of business of the sister concern are required to be treated as for business purposes. The Assessing officer was thus clearly in error in resorting to the disallowance on the short ground that while the assessee has borrowed the money on interest, it has given an interest free advance to the sister concern. CIT(A) was justified in reversing the disallowance so made by the Assessing Officer. - Decided in favour of assessee
Addition u/s 41 - cessation of liability - assessee has shown an amount due to M/s Planet Star Trading Pvt. Ltd. for more than three years - Held that:- Unilateral entries in the accounts will not amount to cessation of liability, section 41(1) contemplate the obtaining by the assessee an amount either in cash or in any other way whatsoever benefit by way of remission of cessation. It should not be particular amount obtained by him. For the obtaining benefit to the assessee by virtue of remission of cessation is sine-qua-non for the application of this section. The mere fact that assessee has made an entry or transfer in its account unilaterally will not unable the department to say that section 41(1) of the Act would apply and amount be included in the total income of the assessee. - Decided in favour of assessee
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2017 (3) TMI 1044
Penalty under section 271(1)(c) - unexplained stock, unexplained cash, unexplained investment in furniture and fixture and unexplained investment - Held that:- In the course of survey action, the survey team found unexplained stock, unexplained cash, unexplained investment in furniture and fixture and unexplained investment in renovation of shop alongwith loose papers indicating sales. In the circumstances, where in the course of search or survey action evidences in respect of source of income and application of income both are found, then addition could have been made either on source of income or application of income and it cannot be made both for source of income and application of income.
In the present case, the Assessing Officer in the assessment order has nowhere observed that the assessee was having any source of investment in stock, cash etc other than the sales. In such circumstances, the apparent source of investment in stock, cash, furniture and fixture, renovation in shop etc. is the sales appearing in loose papers and the Assessing Officer should have allowed the telescoping of the income appearing in loose papers against the investment in stock, cash etc. It appears to us that the Assessing Officer has simply made addition for the amount offered by the assessee, without going into whether said addition could have been made in the hands of the assessee or not. It is the statutory duty of the Assessing Officer to assess the income in accordance with law only. We find that the Assessing Officer, even levied the penalty without any finding recorded in the order on the issue whether the explanation filed by the assessee was bonafide or not and whether all material facts related to the addition were disclosed by the assessee.
Thus merely making addition by the Assessing Officer, which is accepted by the assessee, cannot make the assessee liable for the levy of penalty unless the conditions of Explanation-1 of section 271(1)(c) are satisfied. In view of discussion above, we feel it appropriate to restore the matter to the file of the Assessing Officer to examine the applicability of the conditions of Expanation-1 of the section 271(1)(c) of the Act and decide the issue of levy of penalty in accordance with law. - Decided in favour of assessee for statistical purpose.
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2017 (3) TMI 1041
Indexed cost of acquisition and improvement - lower authorities have taken the fair market value of land as on 01-04-1981 at ₹ 60,483/- by backward indexing of the DLC rates as on 5-08-1998 of the agricultural land and thereby indexing it to ₹ 4,30,034/- as against the assessee's claim of fair market value of the land as on 01-04-1981 at ₹ 1,21,000/- based on sale deed of house dated 10-07-1985 and thereby indexing it to ₹ 8,60,310/- - Held that:- The fair market value of the land as on 01-04-1981 determined by the assessee at ₹ 1,21,000/- on the basis of sale deed dated 10-07-1985 (PB 20-22) of a house of 52.14 sq. yard sold for ₹ 12,000/- is more reasonable. This is because as per this sale deed the rate works out at ₹ 222/- per sq. Yard. The assessee's land is 3,607 sq. yard and adopting this rate its value comes to ₹ 8,00,754/- but assessee has only considered approximately 15% of this value i.e. ₹ 1,20,113/- which is rounded off by the assessee to ₹ 1,21,000/- as the fair market value of the agricultural land as on 01-04-1981. Further, the cost of improvement claimed on account of land levelling charges of ₹ 20,000/- to remove the Kachi Dol and to make the land even which because of the irrigation nail was uneven by using the JCB is reasonable. Therefore, the AO is directed to consider the indexed cost of acquisition and improvement of the agricultural land sold by the assessee at ₹ 12,02,592/- as claimed by the assessee. Thus Ground of the assessee is allowed.
Deduction u/s 54 in respect of purchase of agricultural land - revenue not allowed this claim for the reason that the sale deed of the agricultural land under consideration was registered on 03-08-2010 and therefore, the agricultural land purchased prior to the execution of sale deed is not entitled for deduction u/s 54B - Held that:- In view of the decision of Hon'ble Supreme Court in the case of Sanjeev Lal vs. CIT [2014 (7) TMI 99 - SUPREME COURT ] and Subhash Vinayak Supnekar [2017 (1) TMI 58 - BOMBAY HIGH COURT ] wherein it was held that where the investment in purchase of residential house or investment in bond is out of the amount received on agreement to sale, the deduction should be allowed even if the sale deed is registered subsequently. However, find that the assessee has only 1/7th share in the agricultural land sold and therefore, to ascertain the availability of the amount with the assessee to purchase the agricultural land of ₹ 5,20,050/-, the issue is set aside to the file of the AO with the direction to allow the deduction u/s 54B in respect of the purchase of this agricultural land to the extent of availability of the funds with the assessee. Ground of the assessee is allowed for statistical purposes.
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2017 (3) TMI 1031
Interest charged u/s 234B and 234C - returned income or assessed income - additional income was surrendered during survey to buy peace and avoid further adverse consequences - Held that:- There is no iota of evidence brought by the Revenue that this income has actually arisen in assessment year 2006-07. Even the provisions of section 209(1) of the Act talks of the payment of advance tax in the financial year. In our view, in view of the peculiar facts of this case, in the financial year neither the assessee can foresee accrual of the income which has arisen as on 5.3.2008 nor the Assessing Officer could have required the assessee to pay advance tax in pursuance of an order made under section 210 of the Act. In view of this fact, we are of the view that due to the clear mandate of section 234B (1) of the Act, since the assessee was not liable to pay advance tax under section 208 or 210 of the Act, therefore, that the assessee was not liable to pay advance tax in respect of income of ₹ 90 lakhs which he declared on 5.3.2008. Since the assessee was not liable to pay advance tax, no question of deferment of advance tax under section 234C of the Act arises. In view of this fact, we are of the view that it is a case where interest cannot be levied under section 234B and 234C of the Act on the assessee. We accordingly set aside the order of the ld. CIT(A) and delete the interest. - Decided in favour of assessee.
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2017 (3) TMI 1030
Disallowance of amount of provision made for sales promotion expenses incurred during the previous year - Held that:- These expenses are incurred wholly to promote the sales of the products of the assessee by way of prizes and incentive to those dealers who achieved certain sales. But on the other hand the revenue authorities had disallowed the expenses by holding that these expenses are incurred in the next year and not pertains to the year under consideration. We noticed that while following the mercantile system of accounting according to which one has to account for income and expenses on accrual basis and since in the present case the liability to pay this amount had already crystalized as on 31st March 2004 as the assessee has distributed the prizes and the gift of gas mantles to the dealers in FY 2004-05 relevant to AY 2005-06 on the performance achieved on the sales achieved in the FY 2003-04 relevant to AY 2004-05. Therefore, this basis of disallowance made by the department is not sustainable and hence the additions as made are liable to be deleted - Decided in favour of assessee
Disallowance of claim of deduction being the amount of expenses incurred on packing materials and transportation expenses - Held that:- In the present case the assessee company has discharged its onus by placing on record/supply to the revenue authorities of the requisite details in order to establish the genuineness of the claim made by the assessee, therefore in these circumstances, we found that it is undisputed fact that the revenue authorities have not placed on record any material to show that the parties to whom payments were made were in any way related to the assesse and moreover no attempt has been made by the revenue to carry out any independent inquiry. Therefore, the basis of disallowance made by the department is not sustainable and hence the additions as made are liable to be deleted and hence the same are deleted. - Decided in favour of assessee
Disallowance of retainer ship expenses - revenue authorities have disallowed this amount on the ground that the nature of services being rendered by the person have not been proved by the assessee - Held that:- We have noticed that the assesse has already furnished all the details called for by the Ld. AO like confirmation, copy of the return of income, Xerox copy of bank statement showing the debit/credit entries in the books of accounts in order to show that the retainership fee has been paid to the retainers and the same has already been shown in their return of income and paid tax due thereon, therefore now again taxing it in the hands of the assessee company would amount to taxing the same income twice. On the other hand, the revenue authorities have not placed on record any material in order to show that the parties to whom payments were made were in any way related to the assessee and moreover no attempt has been made by the revenue to carry out any independent inquiry. Therefore, this basis of disallowance made by the department that it appears to be non-genuine is not sustainable and hence the additions as made are liable to be deleted and hence the same are deleted. - Decided in favour of assessee
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2017 (3) TMI 1052
Validity of reopening of assessment - Held that:- The reopening was done on the basis of Investigation Wing. As decided in case of Signature Hotels (P) Ltd. Versus Income Tax Officer and Anr. [2011 (7) TMI 361 - Delhi High Court] a notice under section 148 can be quashed if the "belief" is not bonafide, or one based on vague, irrelevant and non-specific information. The basis of the belief should be discernible from the material on record, which was available with the Assessing Officer, when he recorded the reason. There should be a link between the reasons and the evidence/material available with the Assessing Officer. The "reasons to believe” would mean cause or justification of the Assessing Officer to believe that the income has escaped assessment and not that the Assessing Officer should have finally ascertained the fact by legal evidence or reached a conclusion, as is determined and decided in the assessment order, which is the final stage before the Assessing Officer. - Decided in favour of assessee.
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2017 (3) TMI 1049
Allowing set off of long-term capital loss on sale of preference shares against the long term capital gain earned on sale of apartment - AO disallowed the capital loss treating the transaction to be shame in nature - Held that:- We find that the assessee was holding preference shares in group companies and sold those shares to the company, which is owned by the assessee and her family members. Shares were delivered physically to the purchaser company and thus the assessee has transferred the shares in accordance with law.
In our opinion, the transaction is within the parameters of law and in such circumstances the Assessing Officer cannot hold the transaction as a contrived transaction merely because the sale was to a company in which the assessee and her family members are having controlling stake. Further, it cannot be also considered as contrived transaction because the transaction of sale of shares was done prior to sale of apartment and assessee was aware of increasing prices of the apartment. The assessee can plan to reduce its tax liability through legitimate means. Assessee relied on the judgment of in the case of Union of India versus Azadi Bachao Andolan and another ( 2003 (10) TMI 5 - SUPREME Court) has held that merely because the transaction is entered into by the assessee with the motive to save the tax, the transaction cannot be regarded as colourable device so long as the transaction is valid in law - Decided in favour of assessee
Brokerage expenses while computing the capital gain on sale of apartment - Held that:- assessee submitted explanation about the general role of brokers in sale deals of properties and stated that the broker played a role in negotiating the deal. The learned Commissioner of Income-tax (Appeals) on the basis of said explanation, allowed the appeal of the assessee. We have perused the order of the Assessing Officer as well as the impugned order of the learned Commissioner of Income-tax (Appeals). In our opinion, no documentary evidences in support of services of negotiating the deal by the broker Sh. Rajeev Mathur, in the present deal of surrendering the flat back to the builder, were submitted by the assessee either before the Assessing Officer or before the learned Commissioner of Income-tax (Appeals). In the circumstances, we feel it appropriate to restore the issue to the file of the Assessing Officer for deciding afresh after taking into account the evidence in support of services rendered by the broker. It is nevertheless to mention that assessee shall be afforded sufficient opportunity of hearing. - Decided in favour of revenue for statistical purpose.
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2017 (3) TMI 1048
Additions made on account of alleged on money receipt in respect of Ratnakar III scheme and Ratnakar IV scheme - reliance on loose sheet - Held that:- The assessing authority has no power to disturb the sale price shown except in three cases. The first is under Section 145 of the Act. Where the sale of properties is part of the business of the assessee, the Assessing Officer, if he is of the opinion that the accounts are not correct and complete, may proceed to reject the books of accounts and thereafter make a best judgment assessment of the income in the manner prescribed by Section 144. The second is the case where Section 50C of the Act is invoked on the basis of the prices fixed by the Stamp Valuation Authorities of the State Government. That section, it is pointed out, however, applies only in the computation of capital gains and cannot BE availed by the Revenue where the profits of the business are to be computed.
The third is the case of section 92BA inserted by the Finance Act, 2012 w. e. f. 01.04.2013. This section gives power to the Assessing Officer to recalculate the profits shown by the assessee in cases of “specified domestic transactions”, where the aggregate of such transactions entered into in the relevant accounting year exceeds a sum of ₹ 5 crores.
Except in these three situations, the Act does not permit the enhancement of the profits of the business shown by the assessee.
The loose sheet of papers are wholly irrelevant as evidence being not admissible u/s. 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. See CENTRAL BUREAU OF INVESTIGATION CBI Versus VC. SHUKLA & ORS. [1998 (3) TMI 675 - SUPREME COURT ]
Moreover, the Assessing Office did not make any inquiry from buyers of flat in respect of actual prices paid by them. He also did not make any other inquiry in order to corroborate his conclusion. There is no incriminating evidence to show that the assessee has sold the flats at a higher rate.
In our understanding of the facts, the impounded loose sheet can at the most be termed as “dumb document” which did not contain full details about the dates, and its contents were not corroborated by any material and could not relied upon and made the basis of addition. We, therefore, set aside the findings of the ld. CIT(A) and direct the A.O. to delete the addition - Decided in favour of assessee
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2017 (3) TMI 1045
Assessment orders passed with reference to section 153A - Held that:- We agree with the contentions of Ld. AR that the additions made by the assessing officer is based on the details that is available on record that is from documents like balance sheet, profit and loss account, returns filed by the assessee. It is also observed that no material has been ceased from the premises of assessee, or elsewhere, that is belonging to assessee, which could be a basis of making addition in the hands of assessee. There is no mention regarding any such incriminating materials by the assessing officer in the assessment order.
Further for assessment year 2004-05 it is observed that intimation under section 143(1) was processed by the assessing officer on the basis of the original returns filed by and time limit for issuance of notice under section 143(2) has passed in case of both assessment years. Under such circumstances assessments had not abated as on the date of search and in the absence of any incriminating material a completed assessment cannot be interfered with, by the assessing officer while completing assessment under section 153A. In a peculiar case like this the additions has to be based on some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search, which was not produced.
Accordingly, we hold that assessing officer did not have jurisdiction to frame assessment for the years under consideration. Consequentially, we hold the assessment orders passed with reference to section 153A of the Act are unsustainable in law - Decided in favour of assessee.
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2017 (3) TMI 1043
Penalty u/s 271(1)(c) - concealed income being the difference between the returned loss declared in the return under section 139 (1) and section 153A - Held that:- Assessee filed original return of income by declaring capital loss of ₹ 1,45,77,465/-and a carry forward the business loss amounting to ₹ 1,25,527/-. Subsequently as a result of search, the business loss was reduced to ₹ 20,450/-by reducing the deferred revenue expenditure amounting to ₹ 1,05,077/- and assessee chose not to carry forward such business loss.
Explanation 5A to section 271 (1) (c) is now very clear, that if there is a difference in the original return filed under section 139 (1) of the Act and the return filed in response to section 153A of the Act, the assessee is deemed to have concealed the income. We do not find any scope of any explanation to be given by the assessee when explanation 5A of the Act has been invoked. Thus in our considered opinion the Ld.AO was correct in levying the penalty under section 271 (1) (c) by invoking Explanation 5A of the Act. However he cannot include such income/loss that was already declared in the original return of Income. The capital loss of ₹ 1,45,77,465/- that was declared by assessee should be excluded while calculating the penalty. Accordingly we set aside the issue back to the files of AO for re-computing the as per law. - Decided in favour of revenue for statistical purposes.
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2017 (3) TMI 1054
Addition on account profit on sale/redemption of investment - ITAT deleted addition - Revenue’s stand is that there is no specific provision in the statute which allows a general insurance company’s profits from sale of investments to be exempted from total income for the purpose of taxation under the 1961 Act - Held that:- We do not find any reason to accept the argument of the Revenue which goes contrary to the consistent stand taken by them on similar point in earlier assessment years on the same point of law. The Circular of 16th December, 1988 clearly stipulated the object behind deletion of aforesaid sub-clause (b). The manner in which profits from investments of a general insurance company is to be treated for income tax purpose also can be construed from the Notes on Clauses extracted from the Finance Bill, 1988.
We have reproduced the relevant portion thereof earlier in this judgment. Having regard to the provisions of Section 44 of the Act read with First Schedule thereto, in our opinion the Assessing Officer for the applicable assessment year did not have power to add back the profit of ₹ 245.09 crores arising out of sale of investments to the total income of the assessee. Mr. Nizamuddin also could not explain to us why deviation was made on treatment of profits on sale of investments for the two assessment years. On binding nature of the aforesaid Circular of 1988, no negative argument has been advanced on behalf of the Revenue. We find that on no occasion earlier to or later than these two assessment years, the Revenue had preferred any appeal before the Tribunal or otherwise questioned such reduction by the assessee.
In the cases of Sarita Agarwal (2002 (7) TMI 103 - SUPREME Court ) and Shivsagar Estate (2000 (12) TMI 909 - SUPREME COURT), special leave petitions of the Revenue were dismissed by the Supreme Court having regard to the fact that no appeal had been carried against the orders of identical assessments for the previous years. The same principle ought to apply in respect of the assessment year 2005-2006, with which this appeal is concerned. As regards assessment year 2006-2007, we are dealing with the same in another appeal filed by the Revenue before us. - Decided against revenue
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2017 (3) TMI 1029
Rejection of books of accounts - enhancement of NP rate - assessee has shown purchase of material in the last week of March, 2006 which have been claimed to have been consumed and as a result no closing stock has been shown - Held that:- As per AO though the books of accounts have been maintained and audited at the same time, the assessee has failed to provide the necessary explanation regarding non-disclosure of closing stock out of material purchased at the fag end of the accounting year which has resulted in a situation where the profits cannot be determined correctly, where the material is purchased and consumed in the financial year, the same can be claimed as an expenditure. However, where the material is purchased and not consumed during the financial year, the same has to necessarily form part of the closing stock and to that extent it cannot be claimed as an expenditure. This is a well accepted accounting methodology which is followed for determination of true profits at the end of the year for tax purposes. What is therefore relevant is the books of accounts should be maintained in such a manner that the correct profits can be deduced therefrom. It is no doubt true that the closing stock of one year will form part of the opening stock of the next year, at the same time, the assessee has to determine and disclose its true and correct profit & loss situation for each year. The continuity of the transaction as well as the inter-connection between various transactions cannot be a basis to distort the state of affairs belonging to a particular financial year.
Thus we are of the considered view that the assessee has failed to provide satisfactory explanation regarding non-disclosure of closing stock out of the purchases made towards the fag end of the year and the ld. CIT(A) giving specific instances of such cases, the books of accounts have been rightly rejected by the Assessing Officer and confirmed by the ld. CIT(A).
Regarding the estimation of profits - AO has estimated the net profit rate @ 11% on contract receipt (subject to Interest, Salary to partners and Depreciation) - Held that:- In the instant case, it is true that the books of accounts have been rejected at the same time, there has to be a fair estimation taking into consideration of relevant material as well as past history of the assessee. In the instant case, though no basis has been given by the Assessing Officer at the same time, the ld. CIT(A) after going through the purchases made by the assessee towards cement and TMT Bars and MS Bars has held that the assessee is inflated the consumption of material by at least ₹ 10 lac. In our view, we find the observations of ld. CIT(A) to be fair, reasonable and based on specific material available on record which have not been controverted by the assessee.
Thus we confirmed the addition of ₹ 10 lac confirmed by the ld. CIT(A). The depreciation being statutory allowance, the adhoc disallowance of 10% of the depreciation is deleted.
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2017 (3) TMI 1035
TPA - ALP adjustment addition - Held that:- It is an admitted past history of the case that all the transactions have been considered together all along, except in the assessment year 2005-06 in which transactions of each month are taken togetherrather than transactions of the entire financial period, and in none of the earlier assessment years, the sale transactions have been considered on standalone basis. It is only in the present year, a departure has been made by the TPO in this regard. Whether transactions are so interrelated in relation to the same contract as to be taken together is essentially a factual aspect permeating over the different years, and, as observed by Hon’ble Supreme Court in the case of Radhasoami Satsang Vs CIT [1991 (11) TMI 2 - SUPREME Court ], “ each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year”. In this view of the matter, there is no good reason to take a different stand now and claim that aggregation of transactions cannot be permitted in this assessment year, so far as benchmarking of ANH sales to AE is concerned. The plea of the assessee is indeed well taken and it merits our acceptance. We have also noted that there is no dispute that once this principle is adopted, the benchmarking done of the assessee is to be accepted and the transactions are to be held as arm’s length transactions. The assessee, therefore, deserves to succeed on this issue.
Section 35(2AB) weighted deduction denied - Held that:- The assessee at this stage raises an alternative submission as extracted herein above that authorities below ought to have held it eligible for section 35(1)(iv) deduction. We notice that the learned DRP has not considered the said argument in paragraph no.15.11 hereinabove. It merely holds that section 35(2) of the Act bars the impugned deduction pertaining to expenditure incurred on purchase of land etc. It however does not specifically pinpoint as to what was the expenditure incurred head-wise so as to be hit by the above bar in granting the impugned deduction. We thus deem it fit and proper to remit the issue back to the Assessing Officer for adjudication afresh as per law after examining necessary details stated in assessee’s books of account after affording it adequate opportunity of hearing. This ground is partly accepted for both the assessment years, in the terms indicated hereinabove.
Disallowing employees’ contribution to P.F. on belated payment thereof - Held that:- Learned counsel filed before us Hon’ble jurisdictional High Court’s decision in CIT vs. Amoli Organics (P.) Limited [2013 (11) TMI 971 - GUJARAT HIGH COURT] holding that if the assessee has deposited the above contributions within the grace period, the impugned disallowance is not sustainable. Revenue fails to rebut this legal position. We thus remit the issue back to the file of the Assessing officer for factual verification and allow the impugned contribution to the extent that has been deposited within the stipulated grace period. This ground of assessee’s appeal succeeds for statistical purposes.
Repair and replacement expenses of its building’s roof holdings disallowed - Held that:- Assessee has in fact incurred the impugned sums on plant building’s roof repair. The authorities below have taken strong cognizance to the effect that it has itself estimated benefits of above repairs to continue for a period of four years. We find this approach to be wholly unreasonable since this is not the lower authorities’ case that the assessee’s repairs in question have in any manner added any structure or asset of permanent nature conferring it an enduring benefit. We further find in the case of Taparia Tools Limited vs. JCIT (2015 (3) TMI 853 - SUPREME COURT ) has accepted a similar proposition that allowability of revenue expenditure claim cannot be denied merely on the ground that the same has been amortized or claimed for over a period of years. We accordingly accept assessee’s corresponding substantive ground and direct the Assessing Officer to delete the impugned disallowance
Disallowance of holding stores and spares as treated as capital expenditure - Held that:- It has already come on record that the Assessing Officer himself has accepted assessee’s action having amortized similar expenses in the immediately preceding assessment year 2005-06. Learned Departmental Representative at this stage points out the the impugned expenditure was incurred in preceding assessment year and therefore the same is not allowable in the instant assessment year. We observe in these peculiar facts that our above discussion in preceding paras relying on the case law of Taparia Tools Limited (supra) applies herein as well since there is no material in the case records to indicate any addition in assets resulting in enduring benefits. We further place reliance on Union of India vs. Azadi Bacho Andolan (2003 (10) TMI 5 - SUPREME Court ) to follow judicial consistency to conclude that once the Assessing Officer accepted similar claim in the preceding assessment year, he ought not to reject apportion of the said claim in the instant assessment year. We thus accept assessee’s instant substantive ground as well.
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2017 (3) TMI 1040
TPA - MAM to be adopted for benchmarking - Held that:- In the case before us, the TPO had allowed the assessee adjustment towards sales and marketing expenses while applying CUP method, though the assessee is not satisfied with the percentage of adjustment and not considering the claim for volume adjustment. But, these are procedural aspects-basic fact is selection of MAM. In our opinion,considering the facts of the case,CUP was more suitable method to determine the ALP of the IT.s., for the year under consideration. So, confirming the order of the FAA,we hold that preference given by the TPO to CUP over TNMM was based on valid reasons and it does not require any interference from our side.
Selection of top ten FII's for benchmarking - Held that:- We find merit in the argument of the assessee that only arithmetic mean and not the ‘arithmetic mean of weighted average’should be considered to benchmark and determine the ALP. Proviso to section 92C(2)of the Act also approves the use of arithmetic mean for the purposes of benchmarking and determining the ALP an IT. Therefore,we direct the TPO/AO and rework the adjustment considering the arithmetic mean of the brokerage paid by TOP ten FII.s for the year under appeal.
Adjustments to be made to‘eliminate the material effects’ in TP exercise - Held that:- We find that the assessee stated that it was entitled to an adjustment of 0.67% marketing and sales efforts as against the 0.48% allowed by the TPO, that the marketing cost of ₹ 2.83 crores comprised of salary and related costs of two employees, that the role of those employees was restricted to Non-AE.s only. But it is found that the assessee had not produced the qualification, employment-contract details of those employees and the terms of engagement to establish the claim made by it about rendering of services by them to Non-AE client only. The TPO had reduced the adjustment by a small margin only. In absence of full details reduction made by him is held to be justifiable. It is not a case of non granting deduction at all. So,we uphold the order of the FAA.However,we agree with the assessee that in the denominator only non-AE trades should be considered, as considered in the order of the TPO for the AY.2006-07. TPO/AO is directed to rework the denominator for the year under appeal.
Volume adjustment - Held that:- A perusal of the records reveal that brokerages rate charged from the top ten FII.s varied from 0.17% to 0.50%, that the assessee had charged 0.17% brokers from the client with whom it had the minimum turnover. As per the established business norms, rate of brokerage rate would be higher for smaller turnover. But, the assessee has not followed the said general rule. Thus, there is no evidence to prove that it was following any fixed pattern about allowing volume discount with its clients. We agree with the FAA that it goes against the normal human behavior that an Mauritian-AE would negotiate a volume discount/adjustment when it earning making tax-free income in Mauritius from the Indian stock markets. Definitely, it had would have been allowed had it been documented by the parties. So,we affirm the decision of the FAA that the assessee should not be allowed any volume discount.
Offering EOSB services to its AE and to the Non-AE it was rendering FBS and the FAA - Held that:- For establishing itself in the competitive market of equities all the players would concentrate on market research and data analysis. Though the details of transactions entered in to by the AE with the parties, other than the assessee, for purchasing/selling equities for the year under consideration are not available. Otherwise, it would have given a fare idea about the services availed by it from the India based investor advisors. No correspondence has been produced before us that could prove that there was difference between the services rendered by the assessee to its AE.s and non-AE.s. We are not commenting upon the papers submitted by it for the subsequent AY.s. We would consider them while deciding the appeals for those years. Therefore,we confirm the order of the FAA in that regard and hold that there is no evidence to prove that the AE was provided execution only services for the year under appeal. Considering the peculiar facts and circumstance of the case,we decide the effective ground of appeal(Gs. OA-2 to 8-except Grounds ), raised by the assessee with regard to determination of ALP, in it favour, in part.
Disallowing of write-off of irrecoverable loan advanced to the employee of the assessee - Held that:- We find that there is no doubt about the genuineness of the transaction i. e. advancing of loan. Even if it cannot be allowed as bad loan, it has to be allowed as a business loss. The loan was advanced to the employee and it could not be recovered. So, in our opinion, same has to be allowed u/s. 28 of the Act. Reversing the order of the FAA, we decide ground in favour of the assessee.
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2017 (3) TMI 1028
TPA - selection of comparable - Held that:- Profile of assessee company and the comparables nned to be taken care of while selection of comparable.
Operating revenue filter for excluding the comparables from the list of comparables by adopting a benchmark of 75% income need to be applied.
Deduction u/s. 10A has to be allowed without setting off the brought forward losses and unabsorbed depreciation of non-STP unit. See Commissioner of Income-tax Versus Yokogawa India Ltd. [2011 (8) TMI 845 - Karnataka High Court ]
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Customs
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2017 (3) TMI 1070
Smuggling of gold - detention of petitioner - time limitation - delay in communication of detention order - Held that: - the detention order cannot be found fault with on the ground that the act perpetrated by the detenue were on foreign land. In respect of the acts which may be considered to establish propensity, it is necessary to look into the scope of Section 3 itself.
The authorities were all along aware of the residential address of the detenue, where the detenue alleges to have resided whilst in India. It has been specifically averred in the writ petition that the detenue “was staying at his native place at Bhatkal, Karnataka” and came to know of the detention order only after its publication in a national newspaper on 05.08.2016. There is no reply to this averment.
There is a clear delay in the execution of the order which is not satisfactorily explained by the State snapping the live link between the order and the subjective satisfaction arrived at - Thus, we accept the contention of Mr.Pradeep Jain and quash the detention order on this ground.
Petition allowed on ground of limitation - decided in favor of petitioner.
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2017 (3) TMI 1069
Entitlement of interest - The assessee seeks payment of interest on the moneys deposited pursuant to investigation carried out at its premises by DRI, while the Revenue resists the claim for payment of interest, as it is the stand of the Revenue that the moneys so deposited was in the nature of security deposit - Held that; - while a sum of ₹ 4,57,892/- was adjusted towards duty payable qua October and November, 1995 clearances, in so far as the balance amount was concerned, it was also adjusted towards ''duty liability'', albeit, in respect of past clearances. Therefore, to our minds, the nature of deposit, even if the best case scenario qua the customs authorities is accepted, which is that it was a voluntary deposit, changed after 30.06.1997 - the officers of DRI had clearly no jurisdiction to demand and collect any amounts from the assessee, in view of the fact that they are not vested with powers of an Assessing Officer.
It only be right that the Revenue be called upon to pay interest to the assessee because, by its nature, any such collection of money by Revenue can only be termed as exaction under ostensible authority of law - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1068
Waiver of penalty - Smuggling - export of contraband item - red sanders - absolute confiscation - Held that: - during the course of investigation undertaken by the Customs authorities, nothing has been revealed on record to indicate any part played by the employees of CONCOR in the alleged smuggling of contraband - it has been established that the documents indicating the let export order based on which the container was railed out were fraudulent and fabricated. Consequently, the custodian i.e. CONCOR as well as its employees cannot be faulted for allowing such let export of the container - penalties set aside - appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 1067
Finalization of provisional assessments of ex-bond Bills of Entry filed - Import of crude palm oil - Timing of measurement of quantity - Assessee objects against recording the quantity of the cargo immediately after pumping the oil into the tanks as the same does not yield accurate results - Held that: - identical issue has come up before this Tribunal at Bangalore in the case i.e. Acalmar Oils & Fats Ltd. Vs. CC, Visakhapatnam [2013 (12) TMI 588 - CESTAT BANGALORE] wherein the Tribunal held that the time for stabilization depends on the type of bulk liquid cargo and also the length of the pipeline from the vessel to the shore tank thro ugh which the liquid is pumped and various other parameters. Also, it was pointed out that since the goods had already been cleared after import, it was not practically possible to take fresh dip measurement of the same stock of liquid in the same tank - impugned order upheld - decided against appellant-assessee.
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2017 (3) TMI 1066
Condonation of delay - delay in filing appeal - time limitation - appellant have inadvertently filed the appeal before the wrong forum within time - whether there is no delay in filing the appeal? - Held that: - although appeal was required to be filed before Commissioner of Customs (A), New Customs House, but appellant has filed the appeal before the Commissioner of Customs (A) ICD TKD and same has been received in the office of Commissioner (C) ICD TKD within time. As appeal has been received in the office of Commissioner of Customs, ICD TKD, in that situation, either the office of Commissioner of Customs, ICD, TKD should have not received the appeal or if same would have been forwarded to Commissioner of Customs (A) New Customs House, New Delhi - the appeal cannot be dismissed by the Ld. Commissioner (A) New Customs House New Delhi, merely on the ground that the appeal has not been filed in time - the provision of section 14 of the limitation act are applicable to the facts of this case. Therefore, the period between 15.03.2012 to 18.07.2013 is required to be excluded - appeal restored - matter is remanded back to the Ld. Commissioner (A) to decide the issue on merits - decided in favor of appellants.
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2017 (3) TMI 1065
Misdeclaration of goods - Pistachio Kernals Oil Stock Feed Grade - importer had specifically declared the item imported as not for human consumption, but on verification it was found that the appellant had misdeclared the goods in respect of use in order to escape the NOC from FSSAI as required for human consumption and that the consignment which is imported would be diverted or mixed with Pistachio for human consumption - whether the said consignment has been misdeclared by the appellant or otherwise? - Held that: - Bare perusal of the said certificate of analysis of the samples drawn and sent by the Assistant Commissioner of Customs indicates that the said consignment of Pistachio Kernals feed grade is an animal feed and not for human consumption. On the face of such analytical report, we find that the lower authorities were in error to hold that there was misdeclaration on the part of the appellant - the Directorate of Plant Protection, Quarantine and Storage has also recommended the goods for consumption purposes and the declaration made by the appellant is for consumption as animal feed - FSSAI which gives Food Import Clearance System has specifically recorded that the consignment being declared by the appellant not for human consumption, does not require any FSSAI certificate and hence does not fall under the purview of FSSAI clearances and out of scope - In the absence of any prohibition on import of consignment of Pistachio Kernals not fir for human consumption, we find that the adjudicating authority has erred in absolutely confiscating the consignment - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1092
Refund of SAD - original documents including bill of entry not available - Held that: - bill of entry is nowhere required to be submitted in original. Secondly, the Circular No.06/2008-CUS provides that the Bill of Entry may be defaced. The word may indicate that it would be preferably done but not essentially done - thus, the filing of the original Bill of Entry is not an essential document for processing of refund in terms of N/N.. 102/2007 -CUS read with N/N. 06/2008-CUS - refund allowed - appeal dismissed - decided against Revenue.
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Corporate Laws
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2017 (3) TMI 1060
Performance guarantee - bank guarantee status - Held that:- There is a clear demand because the contractor has been accused of not completing the work required under the contract. There are numerous deficiencies which are committed in performance of the contract. There is delay on the part of the contractor in performing it. The work already done is defective. Therefore, the contractor has failed to observe and perform the terms and conditions of the contract which has resulted in the first respondent suffering huge losses and damages in excess of ₹ 140 crores. That is why the bank is called upon to make payment of the full guarantee amount of ₹ 10 crore.
We are of the firm opinion that the bank guarantee before us is unequivocal and unconditional. It is not a conditional bank guarantee and, therefore, the beneficiary has an unfettered right to invoke it.
As a result of the above discussion, we find that the only two contentions raised before us by Mr. Chagla have no merit. Consequently, the appeal fails. It is, therefore, dismissed. In the circumstances, there shall be no order as to costs.
We clarify that the disputes and differences proposed to be referred to arbitration shall be decided, uninfluenced by any tentative and prima facie findings in the impugned order and our order on this appeal. All contentions of both sides are expressly kept open.
At this stage, Mr. Saraf prays for continuation of the ad-interim order dated 26th October, 2016, and which is continued till date. The request is opposed by the respondent No.1.
The alternate contention also need not detain us. Given the wording which is clear and unambiguous this is an unconditional, unequivocal and irrevocable bank guarantee. It is not an indemnity for losses. It cannot be said to be conditional merely because one sentence of clause 3.1 employ the words “indemnify the losses”. Merely because it seeks to indemnify the losses under the contract and the first respondent has to raise a demand by alleging such losses, will not empower the second respondent-bank to question the demand or the contents of the letter of invocation. It cannot, in any manner, call upon the employer, namely, the first respondent to satisfy it about the quantum of the loss or the manner in which the same was suffered or whether that was indeed suffered at all. The demand by the first respondent and in terms of the above clauses is decisive. It has been so raised and by the letter of invocation dated 27th October, 2016. Once the demand is raised, the bank cannot question it. It is an unconditional performance guarantee in the form of a bank guarantee. The bank cannot call upon the employer to satisfy it as to how the appellant has failed to perform its terms and obligations under the parent contract. In the absence of any linking and of the above nature, even the alternate contention must fail.
Having noted Mr. Saraf's request, we find that the bank guarantee is unequivocal and unconditional. Further, it is a bank guarantee as ruled by us. In such circumstances, as a independent obligation of the banker is flowing from the same, that cannot be interfered with. The request is, therefore, refused.
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2017 (3) TMI 1062
Rejecting the prayer of the appellant/plaintiff/decree-holder to eschew evidence of the respondent/defendant/judgment-debtor in a proceeding under Section 47 of the Code of Civil Procedure, 1908 as well as to dismiss such application as not maintainable - Held that:- Having regard to the contextual facts and the objections raised by the respondent, we are of the unhesitant opinion that no case has been made out to entertain the remonstrances against the decree or the application under Section 47 CPC. Both the Executing Court and the High Court, in our comprehension, have not only erred in construing the scope and ambit of scrutiny under Section 47 CPC, but have also overlooked the fact that the decree does not suffer either from any jurisdictional error or is otherwise invalid in law. The objections to the execution petition as well as to the application under Section 47 CPC filed by the respondent do not either disclose any substantial defence to the decree or testify the same to be suffering from any jurisdictional infirmity or invalidity. These are therefore rejected.
On a consideration of all relevant aspects in the entirety, we are thus disinclined to sustain the impugned orders and hereby set-aside the same. The appeals are allowed. The Executing Court would proceed with the execution proceedings and take it to the logical end with utmost expedition. No costs.
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2017 (3) TMI 1061
Administrative circular issued by SEBI under Section 11(1) of the Securities Exchange Board of India Act, 1992 - whether can be the subject matter of appeal under Section 15T of the said Act? - Held that:- Both Rules made under Section 29 as well as Regulations made under Section 30 have to be placed before Parliament under Section 31 of the Act. It is clear on a conspectus of the authorities that it is orders referable to Sections 11(4), 11(b), 11(d), 12(3) and 15-I of the Act, being quasi-judicial orders, and quasi judicial orders made under the Rules and Regulations that are the subject matter of appeal under Section 15T. Administrative orders such as circulars issued under the present case referable to Section 11(1) of the Act are obviously outside the appellate jurisdiction of the Tribunal for the reasons given by us above. Civil Appeal allowed and the preliminary objection taken before the Securities Appellate Tribunal is sustained. The judgment of the Securities Appellate Tribunal is, accordingly, set aside.
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FEMA
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2017 (3) TMI 1059
Penalty imposed under FEMA for contravention of the provisions of Section 9(1)(b) and Section 72(i)(c) of Foreign Exchange Regulation Act, 1973 - Single Judge declined to entertain the writ petition on the ground that an alternative efficacious remedy of appeal is available against the impugned order - Held that:- Having regard to the specific case of the writ petitioner/appellant herein that the impugned order was in violation of the principles of natural justice, in our considered view dismissal of the writ petition at the threshold solely on the ground of availability of alternative remedy is not warranted.
Accordingly, the order under appeal is set aside and the writ petition is restored to file for consideration afresh in the light of the observations made above.
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Service Tax
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2017 (3) TMI 1106
Business auxiliary service - whether the amounts received from Coca Cola under the heads “Sales Target Incentive” and “Advertisement and Publicity expenses” are covered under business auxiliary service? - The SCN alleges that the appellant has received the aforesaid amount from the brand owners to promote and market the brands of the brand owners - Held that: - BAS is an omnibus service covering within its fold various types of services. It has not been indicated either in the Show Cause Notice or Order-in-Original under which sub clause the appellant’s service is being charged to service tax. By process of elimination, we conclude that it is likely to be under “Promotion or marketing or sale of goods produced or service provided by the client”; we note that no investigation has been undertaken by Revenue into the reasons for which appellants have received the payments. Hence, it is not very clear why the appellant has received the said amounts from M/s Coca cola
When we look at the clause (i) the definition of the BAS, which covers promotion or marketing or sale of goods produced or service provided, we fail to see how the promotion of the brand name can be brought under the above clause.
A new service stands introduced with effect from 1.07.2010, which covered specifically “Brand Promotion Service” - Even if a view is taken that the service rendered by the appellant is covered under the new service w.e.f. 01.07.2010, the same cannot be charged to service tax under BAS for the earlier period - this is established by the Tribunal in the case of Sourav Ganguly vs. Union of India [2016 (7) TMI 237 - CALCUTTA HIGH COURT].
There is no justification for the demand of service tax raised under BAS for the period 2006-07 to 2009-2010 - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1105
Validity of show cause notice - extended period of limitation - Whether the ingredients for resort to proviso to section 73(1) of FA, 1994 are present to obviate the contention that section 73(3) of FA, 1994 should have been resorted to for closing the matter?
Held that: - the service tax authorities did commence correspondence with the appellant for payment of remaining dues only following the admission in the service tax returns that the said amount was outstanding. In these circumstances, there can be no greater claim to candidness than that demonstrated by appellant and there is no justification for alleging, or finding, that they had suppressed or misdeclared any relevant material. With such admission of outstandings, intent to evade tax is also an allegation that would not sustain - The ingredients for invoking the extended period, and thus also penalty u/s 78 of FA, 1994, are clearly absent. This is a fit case of closure of the proceedings u/s 73(3) of FA, 1994, without any of the penalties, as tax and interest had been paid on ascertainment and communication from service tax authorities - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1100
Services of laying pipelines and conduits - whether works contract or not - the appellant assessee had pleaded that the works of laying of pipelines for sewage etc. are not for commerce and trade and as such the same is exempted from service tax in terms of provisions of Explanation of Section 65 (105)(zzzza) of the Finance Act, 1994 - Held that: - the issue now stands settled by the Larger Bench of this Tribunal in M/s Lanco Infratech Ltd. [2015 (5) TMI 37 - CESTAT BANGALORE (LB)] wherein it has been held that such works executed by the appellant in the nature of sewerage works, laying of pipe and for water supply falling under Explanation (ii) (b) fall under the definition of "works contract service" and were also exempted under the classification commercial and industrial construction service prior to 1/6/2007 - demand set aside.
Extended period of limitation - Held that: - the issue is wholly interpretational and thus the longer period of limitation is not invokable under the facts and circumstances.
Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1104
Commercial Training or Coaching Service - demand - Held that: - Since solely based on the statement given to the income tax department, the service tax department proceeded against the appellant and in view of the fact that the income tax demand raised by the department has been set aside/ settled by the Income Tax Tribunal, we are of the view that the present demand cannot be sustained against the appellant - Further, the department has not produced any evidence to show that the appellant has received any unaccounted for money towards providing the taxable service. Thus, the service tax demand cannot be confirmed without any tangible evidence - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1102
Validity of SCN - incomplete information in SCN - whether the SCN have been issued without alleging short payment/non-payment of Service tax and/or is vague? - Held that: - the SCN is defective as it do not have or annexed the contents of letter dated 21.01.2009 issued by DGCEI to the office of Commissioner, Customs and Central Excise, Meerut-I. Non supply of copy of information received by DGCEI from EPFO or any other source, render the SCN vague - There is no allegation in the SCN that the appellant had filed wrong returns and returns filed have been found to be prima-facie wrong, without reference to the books of account maintained by the State Bank of India - SCN, based on incomplete information, not sustainable - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1101
Refund claim - time bar - unjust enrichment - Held that: - u/s 11B of Central Excise Act, 1944, the amount claimed is required to be credited to the Fund unless the applicant is able to evidence that the incidence had not been passed on - The mere fact that the service tax amount have not been in the clients ledger account, and that the service tax amount paid has been accounted as an expenses in profit and loss account cannot override the factual position that whatever billing has been made is inclusive of service tax which is not shown separately. So there is no alternative but to infer that the service tax amount has been recovered from their clients and embedded in the billing amount - refund claim allowed on account of unjust enrichment - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1099
Business Auxiliary Services - services of promotion and marketing/distribution of various products of M/s. B.S.N.L - demand - Held that: - the present matter is no longer res-integra and the same is decided in favour of the Respondent by the precedent decision of this Tribunal in the case of M/s South East Corporation Vs. Commissioner of Central Excise & Service Tax [2007 (5) TMI 111 - CESTAT, BANGALORE], where it was held that the said activity does not come within the ambit of BAS and hence, the demand is not sustainable - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1103
Levy of penalty - invocation of section 80 - Works Contract Service - tax paid on being pointed out - ignorance of law was given as reason for non-payment of tax - Held that: - before adjudication of the matter, the appellant had paid ₹ 5,84,962/-, which has been appropriated in the adjudication order and the balance amount of tax alongwith interest was paid immediately after adjudication of the dispute. The authorities below have not specifically alleged/ concluded regarding the involvement of the appellant in any fraudulent activities with intent to defraud the Government Revenue. It is not the case of revenue that the appellant recovered the service tax amount from the service receiver and had not deposited the same with the Government Exchequer - benefit of Section 80 ibid should be extended to the appellant for non-imposition of penalty u/s 76, 77 and 78 ibid - penalty set aside - appeal allowed - decided in favor of appellant.
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Central Excise
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2017 (3) TMI 1098
Provisional assessment - whether adjustment of excess paid duty against short paid duty is permitted? - Rule 7 of the CER 2002 - Held that: - In view of provisions of provisional assessment, it is clear that at the time of the finalization of the assessment, total duty paid/payable has to be taken in to account and if there is net amount either short paid or excess paid only that amount will be available either for recovery or refund. Therefore final assessment is done in consolidation in respect of clearances made in particular financial year. There is no specific provision in Rule 7 that finalization of assessment shall be done either on consignment basis or monthly basis - the Asstt. Commissioner, suo-moto assessing the duty on monthly basis and wherever there is short payment, demand was raised ignoring the excess paid duty is not permitted in terms of provisional assessment as provided u/r 7 of CeER, 2002 - decision in the case of Toyota Kirloskar Auto Parts Pvt Ltd Vs. CCE., LTU, Bangalore [2011 (10) TMI 201 - KARNATAKA HIGH COURT] followed - adjustment of excess paid duty against short paid duty is permissible for the entire year i.e. 2003-04 at the time of finalization of the assessment - appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1097
Validity of SCN - adjustment of excess paid duty with short paid duty - appellant's case is that there is no demand arising out of final assessment order of the provisional assessment. The final assessment order itself is appealable and without challenging the final assessment order the proposal of demand by issuing SCN is premature, hence not sustainable - Held that: - the assessment order was not challenged by the revenue by review/filing appeal before the Commissioner (Appeals). Therefore the assessment order whether right or wrong, it attained finality. In such circumstances, it is not open to the revenue to issue SCN to the appellant. Therefore the said SCN is lacking jurisdiction, hence all the proceedings flowing from the SCN is non-est in the eyes of law - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1096
CENVAT credit - job-work - whether cenvat credit is admissible in respect of inputs used by the job worker in the manufacture of job work goods under N/N. 214/86-C.E. dated 25.03.86 which is cleared without payment of duty back to the supplier of raw material?
Held that: - As per the said notification, the main condition is that on the job work goods the principal manufacturer is under legal obligation to discharge the excise duty. Therefore the goods manufactured by the job worker can not be treated as exempted goods, consequently cenvat credit on the inputs used in such job work goods can not be disallowed - credit allowed - appeal dismissed - decided against Revenue.
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2017 (3) TMI 1095
CENVAT credit - demand on the ground that the appellant-unit removed some to the Export Oriented Unit against permissions issued by the officer having jurisdiction over the EOU between July 2004 and March 2005 for which notice was issued on 4th August 2005 for breach of condition of N/N. 22/2003-CE dated 31st March 2003 - Held that: - there is no bar on a manufacturing facility removing inputs as such for any reason that may have motivated such removal. CENVAT Credit Rules, 2004 require that, if CENVAT credit has been availed on such inputs on procurement, duty to that extent must be made good. Admittedly, appellant has done so. Therefore, the transfer from appellant unit to their sister-undertaking has been of duty-paid goods and is a transaction that is clearly outside the purview of Central Excise Act, 1944 - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1075
Shortage of stock - demand - penalty - extended period of limitation - Held that: - there is no contumacious conduct and/or suppression on the part of the appellant. The issues involved in this case are interpretational in nature and most of the demands have been raised by way of change of opinion - penalty not imposable - appeal disposed off - decided partly in favor of assessee.
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2017 (3) TMI 1088
Refund claim - unjust enrichment - rejection on the ground that the affidavit & SCN do not support the test as to unjust enrichment - Held that: - the impugned order suffers from mistake of fact as the courts below have considered the first transfer from the factory to the Depot by way of sale which is a mistake apparent on the record. Further, where the appellant have written off the excess duty paid to the profits in the relevant accounting year, that does not amount to passing of duty to a third party. The presumption drawn by the Revenue has got no legs to stand - the claim of refund of the appellant is not hit by the doctrine of unjust enrichment - prior to the period 25/09/1999 when N/N. 43/1999-CE was issued bringing the doctrine of unjust enrichment applicable to the refund arising out of provisional assessment; is not applicable retrospectively - refund allowed - appeal allowed - decided in favor of appellant-assessee.
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2017 (3) TMI 1074
Claim of refund after reduction in MRP post clearance - Valuation - Footwear - Depot as place of removal - MRP based valuation - Section 4A of Central Excise Act, 1944 - Held that: - Sub-section 2 of Section 4A of the CEA, 1944 provides that when the goods are specified under Sub-section 1 of Section 4A and they are chargeable to duty of Central Excise with reference to value then notwithstanding anything contained in Section 4 such value is deemed to be the retail sale price declared on such goods less such amount of abatement if any, from such retail sale price as the Central Government may allow by N/N. 2/2006 CE(NT) dated 01/03/2006 in the Official Gazette - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1079
CENVAT credit - MS Plates - MS sheets - Welding Rods - Steel wire - Wire mesh - MS strapping - Held that: - the appellant having established the fact of use of disputed items in the factory, the disallowance of credit is unjustified - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1076
CENVAT credit - contravention of Rule 3(5) of CCR - whether the appellant is liable to reverse cenvat credit on capital goods when the capital goods are removed after being used for a period of about one year also? - Held that: - It is pertinent to note that till the law was amended as on 13.11.2007 in respect of used capital goods, there was no liability to pay duty. In fact this is evident from the fact that in the Cenvat Credit Rules 2004, the proviso was added making the position clear which was not cleared in the earlier provision - credit allowed - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1080
CENVAT credit - duty paying documents - Whether the appellant is entitled to Cenvat credit of ₹ 89,854/- availed on receipt of inputs in the factory, wherein on the invoices address of Head Office is mentioned? - Held that: - the appellants have produced the evidences, which shows that the goods were received in the factory at Ghaziabad as is evident from the goods received note, and the weighment slips at Ghaziabad. Further, it is the admitted case of the Revenue that the appellants have got only one manufacturing unit and head office at Meerut - credit allowed.
Scrap - Whether the Central Excise duty is excisable on sale of scrap generated in course of processing used and worn out tyres? - Held that: - the issue is no longer res-integra and the said Explanations have been considered by the Hon'ble Supreme Court in the case of DSCL Vs. Union of India, [] wherein it has been held that waste and scrap generated in course of manufacture, although the same may be cleared for value or consideration, but the same are not exigible to Central Excise duty - demand set aside.
CENVAT credit - capital goods - disallowance of Cenvat credit being 50% of the eligible credit, which was required to be taken in the subsequent year, but was taken in the 1st year itself - Held that: - the appellant has stated that the reason for taking of credit before it was due, was due to over sight and no mala-fide was on the part of the appellant. The credit was anyway available after few months in the next financial year, Accordingly, only the liability for interest survives, no penalty is excisable on the appellant - penalty set aside - interest upheld.
Appeal disposed off - decided partly in favor of appellant.
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2017 (3) TMI 1094
CENVAT credit - denial on the ground that the assessee sold the raw material on which they had taken Cenvat credit - Held that: - there has been no defence with the appellants in case of 6,70,000 Kgs of raw material of Polyethylene granules for which invoices were issued by M/s GAIL to M/s Resham Polymers ltd., but the said goods were never physically received in the factory of appellant and the appellant, therefore, wrongly took the Cenvat credit of ₹ 41,40,880/- on this account. The appellant assessee has not given sufficient evidence that this material quantifying 6,70,000 Kgs of raw material, polyethylene granules was received by them and used for manufacture in their factory - this demand of cenvat credit of ₹ 41,40,880/- on account of non-receipt of the above raw material(6,70,000 Kgs) in their factory (out of total demand of Cenvat credit of ₹ 1,05,66,429/-) along with interest and imposition of corresponding equivalent penalty is hereby sustained.
In case of remaining demand of ₹ 61,79,502/-, assessee claims that the repetition of invoices has led to duplication of demands - Held that: - the matter deserves to be remanded to the Original adjudicating authority, who shall examine the same - matter on remand.
Appeal allowed by way of remand.
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2017 (3) TMI 1093
100% EOU - benefit of N/N. 53/1997-Cus dated 03.06.1997 - import of Multi Blade Frame Saw (MBFS) - denial of benefit on the ground that the machinery was not put to use, which is the condition of notification to avail benefit - Held that: - The appellants argue that they could not put into operation as the supplementary machines were not imported due to differences with the bank cannot exonerate them of their responsibility as they did not get extension of time period from the Customs for putting the machine into operation within prescribed time - benefit rightly denied - appeal dismissed - decided against appellant.
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2017 (3) TMI 1090
Clandestine removal - Gutkha - alleged increase in the speed of gutka making machines i.e. by making 80 number of pouches per minute instead of 60 pouches per minute - the Revenue’s case is entirely based on the statements of Shri Tarachand recorded, and the panchnama drawn on 19.3.2008, i.e. the date of visit of Central Excise officers - Held that: - there is no sufficient corroborative evidences available in the form of supplies and receipt of raw material and the dispatch / transportation of the extra production by the appellant and to whom the supplies of extra production were made, and which were the means of transport for supply and disposal of said extra production. Thus the Revenue’s case which is based mainly on the statement of the partner, Shri Tarachand cannot be sustained - independent panchnama witnesses retracted their statements though after a lapse of long period. It is on record that panch witnesses deposed before the Commissioner saying that they did not witness the testing of the speed of machines by the Central Excise officers and further the said witnesses had not been present during the recording of the statement of Shri Tara Chand and they did not send the annexures to the statement of Shri Tara Chand - demand set aside - appeal allowed - decided in favor of appellant-assessee.
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2017 (3) TMI 1089
Benefit of the N/N. 4/2006-CE - cement cleared for export to Nepal - appellants are claiming benefit of N/N. 4/2006-CE dated 1.3.2006 either under its serial no. 1A or under serial no. 1C. The appellants plead that they fulfilled the necessary conditions to claim the benefit against serial No. 1A. Alternatively, the appellants plead that the benefit of Serial No. 1C of the N/N. 4/2006-CE is available to them - The Revenue claims that since the provisions of Standards of Weights and Measures Act, 1977 and the Rules made thereunder are not applicable to the goods for export, the benefit of N/N. 4/2006-CE will not be applicable to the goods namely Cement exported to Nepal by the appellants
Held that: - When the provisions of Standards of Weight and Measures Act (SWMA), 1996 and the Rules made thereunder are not applicable to export goods and therefore, RSP(MRP) is not required to be printed on such packages of cement exported to Nepal, the appellants assessee, even when they print the MRP/RSP on their cement bags exported to Nepal, the said goods (exported to Nepal) are not entitled to the benefit of N/N. 4/2006-CE - The appellants also admit that there is no statutory requirement to declare sale price (RSP/MRP) on the cement bags meant for export to Nepal - the benefit of the N/N. 4/2006-CE is not available to the subject goods - appeal dismissed - decided against appellant-assessee.
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2017 (3) TMI 1082
Shortage of stock - 75 pairs of domestic leather sandals - the officers compared the figures given in the sandal stock report with the recorded balance of RG-1 (RUD No.5) and asked the appellant why the quantity shown in RG-1 on 28.05.2005 as 11490, on 04.06.2005 as 9252, on 08.06.2005 as 9570 and on 13.06.2005 as 9386 as the closing balance of RG-1 was not tallying with the Sandal stock report - Held that: - the stock records found in the four slips of different dates at the time of inspection also include incomplete and/or projected production of the appellant - the appellant’s industry is doing the work in the nature of job work for one particular buyer (Mirza Tanners). Under the agreement with the sole buyer, they manufactured the goods under the brand name ‘Red Tape’, that belongs to the buyer, and they cannot normally clear the goods to anybody else for home consumption without the purchase order and/or directions of the buyers subject to pre-delivery inspection. Even the goods rejected by the buyer have either to be dismantled or retained and the same have to be cleared as per directions and discretion of the buyers namely Mirza Tanners - Further, no instance of any excess stock of raw material have been found nor any instance of any goods cleared without proper documents and/or without payment of duty have been detected - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1084
CENVAT credit - goods used for fabrication of plant and machinery - denial on the ground that the manufacturer of the capital goods were actually the contractors and not the appellant - Held that: - The usage of various iron and steel items in the fabrication of capital goods are to be examined keeping in view the decision of the Hon’ble Supreme Court in Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] - As there is no discussion regarding the actual use of the iron and steel items and the allegation in the notice is entirely on different ground, we find that denial of credit of ₹ 5,91,15,893/- as ordered by the Original Authority is not legally sustainable.
CENVAT credit - capital goods - denial on the ground that no credit is available prior to the commencement of production - Held that: - The capital goods as they were received by the appellant were duty paid and the credit on the same cannot be denied on the ground that they were embedded to earth after installation. The excisability of capital goods is not a point for decision. There is no irregular utilization of credit by the appellant and no such allegation has been made in the show cause notice. Even if the appellant has entered the credit in their books of accounts no utilization is possible without commencement of production. In effect, the credits available on the capital goods will come to be entered as availed and utilized only on production of dutiable final product. We find no justification to deny Cenvat credit on capital goods which, are otherwise legitimately available to the appellant - credit allowed.
CENVAT credit - input services - works contract service, GTA, telephone, security service, consulting engineering service, rent a cab operator service etc - denial on the ground that credit on input services can be allowed only if used for provision of a service liable to service tax or manufacture of goods liable to excise duty - Held that: - The credits availed by the appellant are with reference to construction of factory. The said activity is covered by the definition of input service during the relevant time. It is also to be noted that the definition of “input service” is very broad and includes those services which are used by the manufacturer whether directly or indirectly, in or in relation to the manufacture of final products. It is clear that the said service even if used indirectly by the manufacturer in relation to manufacture of final product, the same should be eligible for credit - credit allowed.
Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1081
Warehouse - whether the appellants licensed Warehouse (Customs Bonded Warehouse) located within the appellant's factory would be considered as part of factory as defined under Section 2 (e) of Central Excise Act? - Held that: - the licence for Private Bonded Warehouse is granted for the storage and exclusive use of the appellant-assessee. It is an admitted fact that the dutiable or excisable products of the appellant namely Acrylic Fibre cannot be manufactured without availability of the raw material being imported Acrylonitrile Nitrogen Monomer or ACN. Thus, the “Nitrogen Gas” utilized in drawing the raw materials from the Bonded Warehouse is a part of the manufacturing activity, integrally connected in the process of manufacture, and accordingly, I hold that they are entitled to exemption of duty under N/N. 3/2005-CE being a captive consumption under the facts and circumstances - the Customs Private Bonded Warehouse of the appellant is a part of the factory as defined u/s 2 (e) of CEA - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1071
Waste and scrap - Dutiability - whether on waste and scrap cleared by the appellant, they were liable to discharge duty on the transaction value? - Held that: - the Tribunal in the case of Insurance & Electricals Co. Vs. CCE Bhopal [2008 (4) TMI 582 - CESTAT, NEW DELHI] dealt with an identical situation in respect of waste arising out of used fire bricks and has held that in as much as there is no entry in the Central Excise Tariff in respect of waste of fire bricks, no demand can be raised in respect of the same - demand set aside - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1086
SSI exemption - use of Brand name which was assigned vide oral contract - manufacture of batteries - demand on the ground that they have manufactured batteries with the brand name of others - brand name assigned - benefit of N/N. 8/2003-CE dated 01/03/2003 - Held that: - the persons to whom the said brand names belong have stated that they have assigned the brands in favour of respondent for the manufacture and supply of batteries to them - It is also recorded that even in the absence of written agreement the submission of the owner of the brand name is acceptable as there is no need for written agreement in all cases - registration of assignment cannot be put as a condition to establish the fact of assignment - benefit allowed.
Regarding the other brand names which are unregistered, alleged to have belonging to other persons, we note that the evidences submitted did not categorically establish the ownership of such brands with any other specific person. The impugned order examined in detail the scope of these names and also as to fact whether these can be called as brand names. It is recorded that TURBOTEK is the name representing to a trading firm and not identified as brand name of any product and in fact the name was registered later with one of the respondent and the same was not objected to by any other person. Similarly, the impugned order recorded that names SUPER, MAGIC and EMRALD were also affixed on the goods when cleared to specific dealers as per the request of those dealers. There is no evidence to show that these names were brand names belonging to these dealers.
Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1072
CENVAT credit - manufacture of steel ingots - eligible inputs and capital goods - Held that: - The Hon’ble Supreme Court in the case of Commissioner of Central Excise, Jaipur vs. Rajasthan Spinning & Weaving Mills Ltd. [2010 (7) TMI 12 - SUPREME COURT OF INDIA] has held that steel plates and MS channels used in fabrication of chimney for diesel generating set are eligible, cenvatable items.
Extended period of limitation - Held that: - appreciating the fact that law was not clear during the relevant period as also by appreciating the fact that the entire credit was being availed after reflecting the same in the statutory records and after filing the due returns, the demand is hit by bar of limitation.
Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1085
Valuation of goods - goods cleared from one unit to another unit of the same company - Held that: - if there are independent sales of similar items, then the provisions of Rule 8 of Valuation Rules, 2000 will not apply - In the present case, we note that all the excisable goods are not cleared for captive use by Raigarh Unit. Admittedly, there are independent sales and in such situation, the value of independent sales should be considered as a transaction value for excisable goods cleared on transfer to appellant‟s own unit in Raigarh - there is no need for cost based value invoking the provisions of Rule 8 of the Valuation Rules - appeal allowed.
CENVAT credit - supplementary invoices - Held that: - he issue of availing credit on supplementary invoices is no more relevant as the differential duty demand against the Raipur Unit is set aside.
Appeal allowed - decided in favor of assessee.
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2017 (3) TMI 1078
Valuation - manufacture of computers - inclusion of Technical Service Charges - whether the 'Technical Service Charges' recovered vide separate invoice are includible in the assessable value or not? - Held that: - reliance was placed in the case of PSI Data Systems Ltd Vs Collector of Central Excise [1996 (12) TMI 47 - SUPREME COURT OF INDIA], wherein it was held that software, peripherals and 'technical service charges', are not includable in the assessable value of the computers - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1077
Natural justice - whether the impugned order is vitiated for lack of proper opportunity of cross examining the witnesses of the Revenue and also if the order have been passed in haste without adequate opportunity of hearing to the appellants herein? - Held that: - there is failure on the part of the learned Commissioner in giving intimation to the appellants as regards the persons in respect of whom the cross-examination was refused, secondly the cross-examination after being conducted in part of only four persons have been abruptly stopped without there being any recording in the order sheet why the learned Commissioner did not complete the process of cross-examination of the other persons as permitted by him. Also, no notice was given to the appellants bloat the process of cross-examination have been stopped and or completed from the side of Revenue, neither any opportunities was given to the parties to file their final reply in the matter and consequently they were not heard before passing of the impugned order - thus, there have been violation of the principles of Natural Justice and the provisions of Section 9D of the CEA, 1944 - appeal allowed by way of remand.
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2017 (3) TMI 1073
Shortage of stock - Sponge iron - Held that: - the shortage has been ascertained on the basis of eye estimation and no physical verification has been carried out - also, the officers have failed to take into account 250 MT sponge iron, which was not stored in bunkers - the above stock of Sponge iron lying in the factory was not correctly arrived at and hence, demand is not sustainable.
Unaccounted production and clearance of 347.60 MT - Held that: - demand has been raised only on the basis of these loose sheets. The authenticity of these documents has not been established - Revenue has not bothered to carry out any further investigations to support allegation that the stock of 347.600MT of sponge iron has not been accounted and cleared clandestinely in the absence of any corroborative evidences - The demand raised on this count cannot be sustained.
Appeal dismissed - decided against Revenue.
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2017 (3) TMI 1091
Job-work - who is manufacturer-principal or job-worker - whether the respondent-assessee can be said to be a manufacturer for ‘Parnala’ as the same is got manufactured by others on job work? - Held that: - supply of raw material to another for manufacturing of goods with drawing/design and specifications, does not make the supplier a manufacturer of such goods, unless it is proved that the manufacturing was done by the assessee himself and such job workers were only dummy workers of the firms - appeal dismissed - decided in favor of respondent-assessee.
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2017 (3) TMI 1087
Shortage of stock - penalty u/r 25 of CER, 2002 - whether for variation found at the time of inspection in the stock of finished products being M.G. Kraft paper and the stock of raw material being HMS scrap, found short, whether penalties are exigible u/r 25 of CER, 2002 and Rule 15 of CCR 2004 read with Section 11AC of the CEA? - Held that: - there is no instance of any malafide or any clandestine removal pointed out by the Revenue. Further, the contention of the assessee that the stock-taking was by way of estimation and there is bound to variation, which have not been controverted by the Revenue, in the impugned orders. Under such facts and circumstances, I hold that the appellant is entitled to the benefit of the provisions of sub-section 23 of Section 11 A of the CEA and under such facts and circumstances, no SCN was required to be issued - appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1083
CENVAT credit - M.S. Flats, angles, bars, channels/ shapes & sections, H.R./C.R. strips/coils, welding electrodes paint, thinner, adhesive, flange beams etc. as inputs in construction/fabrication of structural supports, embedded to earth, Frame works, working platforms, etc - denial on the ground that the said goods are neither inputs nor capital goods - Held that: - the appellant have constructed/fabricated machinery and its support structures, accordingly they are entitled to Cenvat credit on the goods in question including welding electrodes - issue being wholly interpretational, extended period of limitation is not invokable - appeal allowed - decided in favor of appellant.
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CST, VAT & Sales Tax
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2017 (3) TMI 1064
Re-opening of assessment - escaped assessment - whether an ‘audit objection’ can be construed as ‘information’ within the meaning of Section 19 of the State Act based on which the assessing officer was satisfied that reasonable grounds exist to believe that any part of the turnover of the appellant-Company had escaped assessment under Section 19 of the State Act?
Held that: - Sub-Section (1) of Section 19 very clearly prescribes that the competent authority, upon information, if satisfied that reasonable ground exists to believe that any turnover of a registered dealer or a dealer to whom grant of registration certificate has been refused in respect of any period has, for any reason, escaped assessment or any turnover of any such dealer assessed under sub-Section (5) of Section 17 has been under-assessed or assessed at a rate lower than that which was correctly applicable, may, within eight years from the date of order of assessment, proceed to assess or reassess the amount of tax in respect of such turnover - There are a catena of judgments of this Court holding that assessment proceedings can be reopened if the audit objection points out the factual information already available in the records and that it was overlooked or not taken into consideration. Similarly, if audit points out some information or facts available outside the record or any arithmetical mistake, assessment can be re-opened.
The Assessing Officer 20 was not satisfied on the basis of information given by the audit party that any of the turnover of the appellant-Company had escaped assessment so as to invoke Section 19 of the State Act - the assessing officer had to issue notice on the ground of direction issued by the audit party and not on his personal satisfaction which is not permissible under law - reopening of assessment not permissible.
Appeal allowed - decided in favor of appellant.
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2017 (3) TMI 1063
Liability of tax - transfer of stock was not backed by any Form-F - The assessing authority was of the opinion that there exists a statutory presumption of sale, unless such transfer beyond the State was backed by Form-F - whether mere absence of Form-F would be conclusive that the sale has taken place justifying demand of tax? - Held that: - The provision is categorical and clear, inasmuch as any transfer of stock, which is not backed by Form-F, would be deemed for all purposes to have been occasioned as a result of sale - Prior to its amendment in the year 2002, such statutory presumption of sale was apparently not in existence - Once a statutory presumption is drawn regarding sale in the absence of Form-F, and the assessee has not been able to put forth any material, which may have been responsible for non-submission of Form-F, the first appellate authority and the tribunal were not justified in interfering with the order of assessing authority, holding the assessee liable to payment of tax - demand justified - revision disposed off.
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